Eastern Europe heads into the unknown

After selecting five Eastern European countries (the Czech Republic, Estonia, Hungary, Poland and Slovenia) as “first-wave” candidates for accession to the EU, the European Commission decided in mid-October to begin negotiations with all the candidates. While this apparent raising of the barrier could delay accession for some of the original five, it does not necessarily involve a commitment to the others. The sudden change of policy is explained in part by the problems enlargement is creating for the Fifteen, but it also reflects growing concern about the outcome of transition in the East. Despite the undoubted gains in democracy, the peoples of Eastern Europe are experiencing a social crisis of unprecedented proportions. And as disillusionment grows, enthusiasm for Europe is waning.

Russia and the other countries of the former communist bloc are said to be in transition to a market economy. But what is “market” supposed to mean? The consumer market, where Polish housewives can now choose from a range of fancy cheeses? The labour market, which has to be “downsized” if it gets too expensive? Or the stock market, which in Russia is growing by leaps and bounds while the majority of the population sinks deeper and deeper into poverty? It’s easy to see why people prefer to talk about “the market” in general, as if it were a socially neutral mechanism.

In the Stalinist empire the word “socialism” served as a cover for oppression and bureaucratic privilege. Now the absence of a defining concept is being used to camouflage reality. The term “capitalism” is never used. Instead, the process is described as transition to the “market economy”.

Clearly, Eastern Europe has gained by the introduction of a multi-party system and the fall of the Berlin Wall. But walls made of money are harder to demolish. And the real issues, i.e. the ethical choices and alternatives (1), are not discussed at all because the free market gospel requires the economy to be taken out of the political arena. As if there is nothing political about replacing collectivisation by privatisation, or the dogmas of “scientific socialism” by the laws of a capitalist market that are supposed to be universally beneficial but are in fact causing social disintegration. Or replacing state bureaucracy by the privatisation of a state in thrall to mafia-run monopolies.

Trotsky saw the Soviet Union as a hybrid society, neither capitalist nor socialist. “Thinking people,” he emphasised, “saw plainly that a revolution in the forms of property does not solve the problem of socialism, but only raises it” (2). And in response to the barrage of official statistics, he postulated "a unique law of Soviet (...)

(1) The award of last year’s Nobel prize for economics to the Indian economist, Amartya Sen, who has so strongly criticised the prevailing separation of ethics from economics, is highly welcome. After the Asian, Russian and Brazilian crises, the jury may well have been ashamed of awarding the previous economics prize to a pair of stock-market game modellers working for the hedge fund LTCM, which a few months later was on the verge of bankruptcy.

(2) Leon Trotsky, The revolution betrayed : what is the Soviet Union and where is it going?, Faber & Faber, London, 1937, translated by Max Eastman, Chapter II, Section 1.

(6) The ten Central and Eastern European countries that have association agreements with the EU and have applied for membership, namely: Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia.